What Is the ISEM? Ireland's Energy Market Explained

By David Tait Reviewed by Cormac Breen

Editorial Manager

The ISEM is the wholesale electricity market for the island of Ireland, covering both the Republic of Ireland and Northern Ireland. It replaced the previous Single Electricity Market (SEM) in 2018. It was developed to align with European Union energy market regulations, aiming to create a more competitive and integrated energy market across Europe.

What Is the ISEM?

The ISEM is the wholesale electricity market for the island of Ireland, covering both the Republic of Ireland and Northern Ireland. It replaced the previous Single Electricity Market (SEM) in 2018.

It was developed to align with European Union energy market regulations, aiming to create a more competitive and integrated energy market across Europe.

The ISEM involves various markets operating independently and on different timelines, including day-ahead and intraday energy markets, balancing market, markets for financial instruments, capacity remuneration market.

The ISEM aims to:

• Increase competition and potentially lower prices for consumers.
• Enhance security of supply through cross-border trading.
• Support the integration of renewable energy sources.
• Improve market transparency and efficiency.

Who Are Eirgrid?Eirgrid is the electricity transmission system operator in the Republic of Ireland. They took over the role from ESB networks in July 2006. ESB continues to manage the distribution system. Both Eirgrid and SONI are owned by the Eirgrid plc group.

What Is the SEM Committee?

The SEM Committee is the governing body for the Integrated Single Electricity Market (ISEM) in Ireland.  

The SEM Committee is responsible for the design, implementation, and overall governance of the Integrated Single Electricity Market (ISEM).  Its primary mission is to safeguard the interests of electricity consumers by fostering effective competition within the market.  

To achieve this, the committee makes crucial decisions regarding licences, market codes, and other regulations that impact the functioning of the ISEM.  Furthermore, it closely monitors the operation of the ISEM and the conduct of its participants to ensure fair and transparent market practices.

The committee is composed of:

1. Members from the Republic of Ireland’s CRU (Commission for Regulation of Utilities) previously the CER.
2. Members from Northern Ireland’s Utility Regulator.
3. An independent member and a deputy independent member to provide impartial oversight.

In essence, the SEM Committee plays a vital role in ensuring the ISEM functions effectively, promotes competition, and protects the interests of electricity consumers across the island of Ireland.

What Is SEMO?

SEMO is a joint venture between EirGrid, the Transmission System Operator (TSO) for Ireland, and SONI, the TSO for Northern Ireland, and is responsible for the day-to-day operation and administration of the Integrated Single Electricity Market (ISEM) in Ireland.

The SEMO key functions are:

• Market Operations: They run the various markets within the ISEM, including the day-ahead, intraday, and balancing markets. This involves managing bids and offers from electricity generators and suppliers to ensure supply meets demand.
• Market Administration: SEMO is responsible for implementing the rules and procedures that govern the ISEM, ensuring fair and transparent market practices.
• Data Management: They collect and publish market data, providing transparency to participants and the public.

What About the Gas Networks in Ireland? Although natural gas is a major part of Ireland's fuel mix, the gas that's distributed to our house for our heating and cooking runs on a different network. Businesses and households that use gas are all connected with a separate network run by Gas Networks Ireland.

How Does ISEM Work?

ISEM provides the opportunity for generators to submit bids at several points during the day and provides much more flexibility in regard to the way generators and suppliers can take part in the energy market trading.

Previously, electricity generators submitted bids to SEM to generate electricity for 30-minute slots on the following day, and bids were queued up in order of least expensive to most expensive, with electricity demand being met firstly by the cheaper bids at the start of the queue to prevent power outages.

ISEM provides much more electricity generation from renewable sources than SEM initially did. A key reason for rebranding SEM as ISEM is to try and take advantage of the increased interconnection between energy markets across Europe. 

The changes brought about by the new ISEM system benefit customers in three ways:

• Supply Security 
  They assure the security of supply by facilitating cross-border trading and best use principles. By trading energy with the rest of Europe, Ireland benefits from the economy of scale found in the EU's larger system.
• More Competitive 
  It is intended to be much more competitive than SEM, thereby increasing the possibilities of customers benefiting from electricity transmission and supply cost reductions.
• Minimising Price Pressures 
  It aims to minimise the price pressures the island of Ireland faces due to its geographical location, and to maximise the use of renewable electricity generation. As renewable energy has a zero-fuel cost and thus is less expensive to generate, this should hopefully result in further future electricity price reductions.

ISEM is also planning significant upgrades to the electricity infrastructure networks on the island of Ireland, based on increasing sustainable energy sources.

Are There Similar Systems to SEM in Europe?

The EU is committed to allowing energy to flow freely in Europe without any barriers, in order to encourage competition and the best energy prices for consumers. 

Although much investment has been made into the EU energy market over the previous years, it is still felt to be underperforming and new objectives and plans are being put into place to work on increasing capacity and connectivity.

What Is the EU's Supergrid?

The end goal for the EU is a “supergrid”, where excess renewable energy generated in one state could be diverted to others, or in case of power failures, other states could help fill the gap when demand outstrips supply. 

Something more and more prevalent these days with the war in Ukraine and its effect on the cost of electricity across Europe.

Many systems similar to ISEM, where countries share energy grids, are currently being planned across Europe. Projects are underway for connecting the three Baltic States (Estonia, Latvia, and Lithuania) to Europe. 

They have already had their electricity grids successfully connected up to Sweden, Poland and Finland, and are now among the best-interconnected states in Europe.

What Is the ISLES Project?

Feasibility studies and research for the ISLES project, completed in 2015, would have linked Ireland, Northern Ireland, and Scotland, to various renewable resources such as wind and wave energy. Unfortunately, after the vote on Brexit, the project was abandoned.

The latest report from the European Internal Energy Market focuses on the delivery of clean energy to meet its climate change targets of 2030 and 2050. The report is the fifth energy package presented by the association, and further updates are expected to continue in the future.